Kuwait Finance House (KFH), the second-largest Islamic bank in the region in terms of assets, is to set up a commercial banking operation in Bahrain.

The move is the latest step in KFH's regional expansion. In March, it acquired a 10 per cent stake in National Bank of Sharjah (NBS), and it is expected to increase its position to 20 per cent through open market stock purchases. KFH has taken two seats on NBS' board and is providing technical and management support for the conversion of NBS into a full-service Islamic bank (MEED 30:3:01).

BMA has also issued a licence allowing for the establishment in Bahrain of International Islamic Investment Bank (IIIB).

The two new licences see Bahrain's full complement of Islamic financial institutions rise to 19, reinforcing Manama's claim to be the home of choice for Islamic banking. BMA's launch of Islamically structured five-year Sukuk instruments in September and the short-term Sukuk al-Salaam paper, first issued in June, have added to Bahrain's reputation as the leading developer of Islamic financial markets (MEED 7:9:01; 22:6:01).

Coinciding with the issue of licences to IIIB and KFH, UK-based Lend Lease Investmentwas granted a licence by BMA for the provision of investment management services.